NEW YORK--(BUSINESS WIRE)--Ralph Lauren Corporation (NYSE:RL) today reported net income of $181
million, or $1.94 per diluted share, for the first quarter of Fiscal
2014, compared to net income of $193 million, or $2.03 per diluted
share, for the first quarter of Fiscal 2013.

"We made important progress on several key initiatives during the first
quarter," said Ralph Lauren, Chairman and Chief Executive Officer. "We
opened a spectacular men’s luxury flagship store in Hong Kong, our first
Polo store in East Hampton and several additional, high profile projects
around the world are developing nicely. We’ve got exciting new product
initiatives planned for Fall, particularly with accessories, and we
intend to support them with innovative merchandising strategies and
compelling advertising and marketing campaigns. I am confident that the
investments we are making today can support profitable, sustainable
growth for us over the long term."

"Once again, our first quarter results demonstrate the resilient margin
structure of our diversified operating model," said Roger Farah,
President and Chief Operating Officer. "Despite an uneven global
operating environment, we planned the business prudently and achieved
sales and profit levels that exceeded our expectations, even as we make
important investments in our long-term growth objectives and in the
infrastructure to support them. We expect that our more recent
investments in new stores, e-commerce operations and international
expansion will contribute to accelerated sales and profit momentum in
the second half of the year."

First Quarter Fiscal 2014 Income Statement Review

Net Revenues. Net revenues for the first quarter of Fiscal
2014 rose 4% to $1.7 billion. Excluding the net negative impact from
foreign currency translation and discontinued businesses, net revenues
increased approximately 6% in the first quarter.

Wholesale Sales. Wholesale segment sales grew 6% to $735
million in the first quarter of Fiscal 2014. Wholesale revenue growth
was primarily a result of the contribution from the newly transitioned
Chaps men’s sportswear operations and continued growth for certain
core North American merchandise categories. A planned reduction in
shipments to certain European customers and the transition of certain
Japanese wholesale distribution to directly operated concession shops
partially mitigated wholesale revenue growth during the quarter.

Retail Sales. Retail sales rose 3% to $879 million from $857
million in the first quarter last year, reflecting the incremental
contribution from new stores and strong growth for e-commerce
operations worldwide that was partially offset by the net negative
impact of foreign currency translation. Excluding the impacts of
discontinued businesses and foreign currency effects, retail sales
increased 6% from the prior year period. Consolidated comparable store
sales declined 1% on a reported basis and were up 1% in constant
currency during the first quarter. The shift in the timing of Easter
is estimated to have mitigated comparable store sales growth by
approximately 2% in the first quarter of Fiscal 2014.

Licensing. Licensing revenues of $39 million in the first
quarter were 8% below the prior year period, as lower Chaps-related
licensing revenues offset higher apparel and fragrance royalties for
Ralph Lauren products.

Gross Profit. Gross profit for the first quarter of Fiscal
2014 increased 1% to $1 billion. Gross profit margin of 60.7% was 160
basis points below the prior year period, due to the integration of the
Chaps men’s sportswear operations and unfavorable foreign currency
dynamics.

Operating Expenses. Operating expenses of $728 million in
the first quarter were 4% greater than the prior year period. The higher
operating expenses primarily reflect overall business expansion, costs
associated with newly transitioned operations and continued investment
in the Company’s strategic growth initiatives and infrastructure that
was partially offset by disciplined operational management. A $16
million gain on the acquisition of the Chaps men’s sportswear license
was included in the Company’s first quarter and full year outlook and
will mostly be amortized in subsequent quarters. Operating expense rate
of 44.0% was 10 basis points above the first quarter of Fiscal 2013.

Operating Income. Operating income for the first quarter
of Fiscal 2014 was $276 million, 5% below the prior year. Operating
margin was 16.7% of sales, 160 basis points below the first quarter of
Fiscal 2013, primarily as a result of the lower gross profit margin
discussed above. Operating margin was better than the outlook that was
provided in May due to stronger than expected productivity gains in
certain operations.

Wholesale Operating Income. Wholesale operating income of $154
million in the first quarter of Fiscal 2014 was in line with the prior
year period. Wholesale operating margin declined 120 basis points to
21.0%, as improved profitability in core North American operations was
more than offset by lower international profits and transition costs
associated with Chaps.

Retail Operating Income. Retail operating income of $160
million was 11% below the prior year period. Retail operating margin
declined 270 basis points to 18.2%, principally a result of negative
foreign currency effects, costs associated with the Company’s global
store and e-commerce development efforts and geographic mix.

Licensing Operating Income. Licensing operating income of $29
million was in line with the prior year period.

Net Income and Diluted EPS. Net income for the first
quarter of Fiscal 2014 was $181 million, 7% below the $193 million
achieved in the comparable period of Fiscal 2013, and net income per
diluted share declined 4% to $1.94 from $2.03 for the same time period.
The contractions in net income and net income per diluted share were
principally the result of the decline in operating income discussed
above.

First Quarter Fiscal 2014 Balance Sheet and Cash Flow Review

The Company ended the first quarter with $1.4 billion in cash and
investments, or $1.1 billion in cash and investments net of debt ("net
cash"), compared to $1.1 billion in cash and investments and $853
million in net cash at the end of the first quarter of Fiscal 2013. The
first quarter ended with inventory up 9% to $1.1 billion from $964
million in the first quarter of last year.

The Company had $66 million in capital expenditures in the first quarter
of Fiscal 2014, compared to $62 million in the prior year period. Free
cash flow, which is defined as net cash provided by operating activities
less capital expenditures, increased 11% to $229 million. The Company
repurchased approximately 0.9 million shares of Class A Common Stock
during the first quarter at an average cost of $175.64 per share,
utilizing $150 million of its authorized share repurchase programs.
Approximately $427 million remained available under the Company’s
authorized share repurchase programs at the end of the quarter.

Global Retail Store Network

The Company ended the first quarter of Fiscal 2014 with 396 directly
operated stores, comprised of 123 Ralph Lauren stores, 59 Club Monaco
stores and 214 Polo factory stores. The Company also operated 505
concession shop locations worldwide at the end of the first quarter. In
addition to Company-operated locations, international licensing partners
operated 69 Ralph Lauren stores and 33 dedicated shops, as well as 89
Club Monaco stores and shops at the end of the first quarter.

Fiscal 2014 Outlook

The Company continues to expect 4%-7% growth in consolidated net
revenues for Fiscal 2014, including a 150 basis point net negative
impact from foreign currency translation and an additional 100 basis
point headwind from discontinued businesses. Operating margin for Fiscal
2014 is still expected to be 25-75 basis points below the prior year’s
record level due to the integration of certain formerly licensed
merchandise categories and geographic regions to directly controlled
operations, accelerated investment in the Company’s long-term growth
initiatives and unfavorable foreign currency effects. The full year
Fiscal 2014 tax rate is estimated at 31%.

In the second quarter of Fiscal 2014, the Company expects consolidated
net revenues to increase by a low-single-digit percentage, including a
200 basis point net negative impact from foreign currency translation
and discontinued businesses. Retail sales are expected to grow at a
mid-single digit rate while wholesale revenues are expected to be flat
to the prior year period as a result of the timing of certain seasonal
shipments and a planned conversion from legacy systems to SAP. Operating
margin for the second quarter of Fiscal 2014 is expected to be
approximately 300-350 basis points below the comparable prior year
period due to the integration of newly assumed operations, the timing of
investments to support the Company’s strategic growth objectives and
unfavorable foreign currency effects. The second quarter tax rate is
estimated at 31.5%.

Conference Call

As previously announced, the Company will host a conference call and
live online webcast today, Wednesday, August 7, 2013, at 9:00 a.m.
Eastern. Listeners may access a live broadcast of the conference call on
the Company's investor relations website at http://investor.ralphlauren.com
or by dialing 517-623-4799. To access the conference call, listeners
should dial in by 8:45 a.m. Eastern and request to be connected to the
Ralph Lauren First Quarter Fiscal 2014 conference call.

An online archive of the broadcast will be available by accessing the
Company's investor relations website at http://investor.ralphlauren.com.
A telephone replay of the call will be available from 12:00 P.M.
Eastern, Wednesday, August 7, 2013 through 6:00 P.M. Eastern, Tuesday,
August 13, 2013 by dialing 203-369-0827 and entering passcode 6293.

ABOUT RALPH LAUREN

Ralph Lauren Corporation (NYSE: RL) is a leader in the design, marketing
and distribution of premium lifestyle products in four categories:
apparel, home, accessories and fragrances. For more than 46 years, Ralph
Lauren's reputation and distinctive image have been consistently
developed across an expanding number of products, brands and
international markets. The Company's brand names, which include Polo by
Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren Collection, Black
Label, Blue Label, Lauren by Ralph Lauren, RRL, RLX, Ralph Lauren
Childrenswear, Denim & Supply Ralph Lauren, Chaps and Club Monaco,
constitute one of the world's most widely recognized families of
consumer brands. For more information, go to http://investor.ralphlauren.com.

This press release and oral statements made from time to time by
representatives of the Company contain certain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include statements
regarding, among other things, our current expectations about the
Company's future results and financial condition, revenues, store
openings, margins, expenses and earnings and are indicated by words or
phrases such as "anticipate," "estimate," "expect," "project," "we
believe" and similar words or phrases. These forward-looking statements
involve known and unknown risks, uncertainties and other factors which
may cause actual results, performance or achievements to be materially
different from the future results, performance or achievements expressed
in or implied by such forward-looking statements. Forward-looking
statements are based largely on the Company's expectations and judgments
and are subject to a number of risks and uncertainties, many of which
are unforeseeable and beyond our control. The factors that could cause
actual results to materially differ include, among others: the loss of
key personnel; our ability to successfully implement our anticipated
growth strategies, to continue to expand or grow our business and
capitalize on our repositioning initiatives in certain merchandise
categories; the impact of global economic conditions and domestic and
foreign currency fluctuations on the Company, the global economy and the
consumer marketplace and our ability to access sources of liquidity; our
ability to secure the technology facilities and systems used by the
Company and those of third party service providers from, among other
things, cybersecurity breaches, acts of vandalism, computer viruses or
similar events; our ability to continue to maintain our brand image and
reputation and protect our trademarks; the impact of the challenging
state of the global economy on consumer purchases of premium lifestyle
products that we sell and our ability to forecast consumer demand;
changes in the competitive marketplace and in our commercial
relationships; risks associated with changes in social, political,
economic and other conditions affecting foreign operations or sourcing
(including tariffs and trade controls, raw materials prices and labor
costs); changes in our effective tax rates or credit profile and ratings
within the financial community; our ability to continue to expand our
business internationally; changes in our relationships with department
store customers and licensing partners; risks associated with our
international operations, such as compliance with the Foreign Corrupt
Practices Act or violations of other anti-bribery and corruption laws
prohibiting improper payments and the burdens of complying with a
variety of foreign laws and regulations, including tax laws; the
potential impact on our operations and customers resulting from natural
or man-made disasters; and other risk factors identified in the
Company's Annual Report on Form 10-K, Form 10-Q and Form 8-K reports
filed with the Securities and Exchange Commission. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.

RALPH LAUREN CORPORATION

CONSOLIDATED BALANCE SHEETS

Prepared in accordance with Generally Accepted Accounting
Principles

(in millions)

(Unaudited)

June 29,

March 30,

June 30,

2013

2013

2012

ASSETS

Current assets:

Cash and cash equivalents

$

940

$

974

$

469

Short-term investments

411

325

563

Accounts receivable, net of allowances

349

458

395

Inventories

1,053

896

964

Income tax receivable

28

29

20

Deferred tax assets

117

120

127

Prepaid expenses and other current assets

186

161

181

Total current assets

3,084

2,963

2,719

Non-current investments

9

81

82

Property and equipment, net

944

932

870

Deferred tax assets

22

22

33

Goodwill

963

968

1,003

Intangible assets, net

325

328

355

Other non-current assets

113

124

132

Total assets

$

5,460

$

5,418

$

5,194

LIABILITIES AND EQUITY

Current liabilities:

Current portion of long-term debt

$

271

$

267

$

-

Accounts payable

196

147

207

Income tax payable

71

43

65

Accrued expenses and other current liabilities

641

664

661

Total current liabilities

1,179

1,121

933

Long-term debt

-

-

261

Non-current liability for unrecognized tax benefits

151

150

164

Other non-current liabilities

369

362

364

Total liabilities

1,699

1,633

1,722

Equity:

Common stock

1

1

1

Additional paid-in-capital

1,797

1,752

1,668

Retained earnings

4,791

4,647

4,199

Treasury stock, Class A, at cost

(2,910

)

(2,709

)

(2,558

)

Accumulated other comprehensive income

82

94

162

Total equity

3,761

3,785

3,472

Total liabilities and equity

$

5,460

$

5,418

$

5,194

RALPH LAUREN CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Prepared in accordance with Generally Accepted Accounting
Principles

(in millions, except per share data)

(Unaudited)

Three Months Ended

June 29,

June 30,

2013

2012

Wholesale net sales

$

735

$

694

Retail net sales

879

857

Net sales

1,614

1,551

Licensing revenue

39

42

Net revenues

1,653

1,593

Cost of goods sold(a)

(649

)

(601

)

Gross profit

1,004

992

Selling, general, and administrative expenses(a)

(735

)

(693

)

Amortization of intangible assets

(9

)

(7

)

Gain on acquisition of Chaps

16

-

Total other operating expenses, net

(728

)

(700

)

Operating income

276

292

Foreign currency gains (losses)

(6

)

(3

)

Interest expense

(5

)

(5

)

Interest and other income, net

2

1

Equity in loss of equity-method investees

(2

)

(1

)

Income before provision for income taxes

265

284

Provision for income taxes

(84

)

(91

)

Net income

$

181

$

193

Net income per share - Basic

$

1.99

$

2.10

Net income per share - Diluted

$

1.94

$

2.03

Weighted average shares outstanding - Basic

90.8

92.2

Weighted average shares outstanding - Diluted

93.1

95.1

Dividends declared per share

$

0.40

$

0.40

(a) Includes total depreciation expense of:

$

(51

)

$

(49

)

RALPH LAUREN CORPORATION

OTHER INFORMATION

(in millions)

(Unaudited)

SEGMENT INFORMATION

Net revenues and operating income for the periods ended June 29,
2013 andJune 30, 2012 for each segment were as follows:

Three Months Ended

June 29,

June 30,

2013

2012

Net revenues:

Wholesale

$

735

$

694

Retail

879

857

Licensing

39

42

Total net revenues

$

1,653

$

1,593

Operating income:

Wholesale

$

154

$

154

Retail

160

179

Licensing

29

29

343

362

Less:

Unallocated corporate expenses

(83

)

(70

)

Gain on acquisition of Chaps

16

-

Total operating income

$

276

$

292

RALPH LAUREN CORPORATION

Constant Currency Financial Measures

(in millions)

(Unaudited)

Same - Store Sales Data

Three Months EndedJune 29, 2013%
Change

As Reported

Constant Currency

Total Ralph Lauren

(1

%)

1

%

Operating Segment Data

Three Months Ended

% Change

June 29, 2013

June 30, 2012

As Reported

Constant Currency

Wholesale net sales

$

735

$

694

5.9

%

6.1

%

Retail net sales

879

857

2.5

%

4.4

%

Net sales

1,614

1,551

4.0

%

5.2

%

Licensing revenue

39

42

(8.1

%)

(8.1

%)

Net revenues

$

1,653

$

1,593

3.7

%

4.8

%

Ralph Lauren is a global company that reports its financial information
in U.S. dollars, in accordance with U.S. GAAP (“GAAP”). Foreign currency
exchange rate fluctuations affect the amounts reported by the Company in
U.S. dollars because the underlying currencies in which the Company
transacts change in value over time compared to the U.S. dollar. These
rate fluctuations can have a significant effect on reported operating
results. As a supplement to its reported operating results, the Company
presents constant currency financial information, which is a non-GAAP
financial measure. The Company uses constant currency information to
provide a framework to assess how its businesses performed excluding the
effects of foreign currency exchange rate fluctuations. The Company
believes this information is useful to investors to facilitate
comparisons of operating results and better identify trends in its
businesses. These constant currency performance measures should be
viewed in addition to, and not in lieu of or superior to, the Company's
operating performance measures calculated in accordance with GAAP.

Presented below are reconciliations of the Company’s non-GAAP measures
of free cash flow to net cash provided by operating activities and
reported to adjusted revenues: